Report shows residential construction growth

Published: 26 November, 2013

The value of contracts awarded in the UK’s construction sector grew by almost 50% in October 2013 compared to the same period last year, according to Barbour ABI’s Economic and Construction Market Review.

The review is a new monthly report designed to give current insight into UK construction industry performance. The most recent report highlighted marked growth in the UK’s residential construction sub-sector, which grew by 16.1% last month compared to September 2013, and emphasised ‘green shoots’ in other sub-sectors. Industrial in particular saw a positive October, with this area doubling the value of activity compared to the corresponding month in 2012.

However, Michael Dall, lead economist at Barbour ABI, has called for caution. “The UK economic outlook has certainly been more upbeat recently with output rising, unemployment falling and inflation remaining around its target level. However this has to be put in the context of the macroeconomic indicators, which show the gap between current economic performance and pre-crisis levels of activity,” he said.

“The Eurozone remains an issue for the UK, with growth weak and the risk of deflation in some countries remaining. In addition, the consistent disagreements on the US budget as well as declining growth levels in China continue to act as external threats to UK economic recovery. Domestically, there is concern that the levels of productivity per worker will constrain the UK recovery and that remains a problem that will affect overall performance in the future. The levels of UK economic debt and the continuation of austerity measures will also prove a strain on growth.

“These latest figures undoubtedly show positive signs, but the scale of future economic growth has still to be determined, and the first half of 2014 will be critical in assessing long term growth potential and knowing whether the construction industry is back on track.”

The data also identified regional variations in overall construction performance. Last month, London was the most prominent region, with the capital scooping 17% of all contracts awarded. Scotland and the North West were a close second, with both securing 11% of works.